Order & inventory management for small businesses

Here are some habits and techniques that we and our clients have adopted, in order to manage and dispatch hundreds of thousands of products a year.

We’re familiar with the journey a new business will go through: sales might be quiet at first and you’re not sure when things will take off, and suddenly you’re inundated with orders and things snowball really quickly. Which is great news of course, but then your new business has to battle to keep up with demand while you’re thrown into a whole new world of shelving, racking, packaging, couriers, customs fees – it’s a huge learning curve, and you’re having to learn on the job while there are customers waiting for their order. This might be the first time they’re ordering from you, so it’s important to create the right first impression so that they recommend and return to your brand. 

Vdepot has been operating in the world of inventory management and order fulfilment for 23 years now, so we’ve collated some habits which we and our clients adopt in order to successfully dispatch hundreds of thousands of products a year.

Use SKU codes and barcodes

SKU (Stock Keeping Unit) codes can be made descriptive to help you easily identify all your products from a quick glance. If you sell on lots of different channels, they’re a way to track your stock levels and how well each product is performing across all of them.

SKU Codes for Inventory Management

 

If your products were named slightly differently across all of platforms/systems and didn’t have a SKU code, this would cause confusion and may lead to picking the wrong item. SKU codes will ensure you have a consistent way of identifying the product across the board.

Remember that SKU codes and barcodes are different and serve different purposes. SKU codes are essential, while barcodes are very very helpful. We recommend you have both, but if you have neither… you’ll need a SKU code first!

When you get to barcoding your products, make sure you check out our barcoding best practices guide.

A place for everything…

Rather than rummaging through piles or boxes each time you get an order, give each individual SKU its own box or space on a shelf.

Have a system that works well for your type of products. For example, if you’re selling t-shirts in XL, L, M, S, XS, you can allocate one style per shelf and divide the shelf into the different sizes.

You’ll also physically see which items you’re running low on, further reducing the chances of out-of-stocks.

Forecast your demand & supply

Data is your friend, and the longer your business is running, the more you will have to help you. Use previous months’ and years’ order numbers to determine how much time you’ll need to spend on fulfilment in the weeks to come, and avoid being caught out by overwhelming order numbers.

 

Also keep this in mind when you’re running a special offer or promotion – do you have the resources to fulfil all of the additional orders a marketing campaign will generate?

At Vdepot we’ve definitely noticed a correlation; the companies that tend to do really well, have been running for years and years and whether the tougher economic times: are the ones that have the best handle on their product and order data.

Without accurate forecasting you could end up with either:

  1. Too little inventory = lost opportunities for sales
  2. Too much inventory = cash sitting on the shelves. This is particularly bad for many food businesses with inventory that has a short shelf life.

Invest in appropriate packaging

Order boxes that suit the size of a typical order. This means that your items are better protected against damage, reducing costs and headaches, and you’re not spending unnecessary time and materials on void-fill. It’s definitely worth that extra expense per box if it’s saving you time and money elsewhere.

For temperature-controlled products, this is particularly important – tightly packed boxes retain their low temperatures much better than packages with lots of free space.

As well as researching online, use your connections to get recommendations on packaging providers; your suppliers, your fulfilment company or wholesale buyers will most likely be happy to share any companies they’d recommend.

Centralise & automate your inventory management

If you sell B2C and B2B, or you sell across lots of different online platforms – avoid allocating different pots of stock to these different channels. This leaves a lot of room for error and you’ll have to continually predict sales levels per product per platform – missing out on opportunities if the sales don’t match your forecasts.

If you’re on Shopify or WooCommerce, there are apps available that link up your other platforms to your Shopify store. Or you can use a third party system such as My.Vdepot to connect all your shops and make sure all orders are deducting inventory automatically from one central pot.

 

Although automating your inventory count will significantly improve your stock management, it’s still a good idea to do regular stock-takes. These will give you extra protection against sell-outs or mistakenly overselling an item, which can cause a lot of customer frustration.

You may need to do this once a week/month/quarter depending on level and breadth of inventory. If you’re doing them monthly but still over- or under-selling an item, perhaps you need to up the frequency until this gets better.

Try to do a stock-take before a peak period, it will save you a lot of stress by reducing mistakes that you’d have to investigate when you’re really busy.

Display key information on your selling platform(s)

Manage your customers’ expectations and reduce noise for your staff by making key information clear and accessible on your website, including:

  • Delivery fees
  • Delivery lead times
  • Your policies for shipping, returns and refunds
  • FAQs about your products

Review your delivery fees

You don’t want to be seen charging ‘too much’ for delivery, but equally offering free or very cheap delivery isn’t always a good idea either – take the time to find the best balance for your business and brand.

Customers would rather feel like they’re paying more for the product than ‘wasting’ money on delivery – consider how the perceived quality of your product might change with the two below examples, despite the customer parting with the same amount of money:

  • £25 order + £5 delivery
  • £30 order + free delivery

It might be best to try and recoup the delivery cost in your product margins, particularly if you’re a high-end brand. Unless you’re selling big or awkward items such as furniture, charging any more than £6 is going to raise alarm bells with your customers, who will assume you’re adding a hefty margin on to your own delivery fees.

Conversely – you’d obviously love to entice your customers with a universal promise of ‘free delivery’, but for certain products with small margins, that’s not going to be sustainable. Many of our customers offer free delivery over a certain threshold, meaning you can provide that goodwill gesture while enticing them to spend more with you. Your free delivery threshold will need to be carefully chosen – work out what you can afford and check what your competitors are doing too.

Record reasons for returns

Capturing and logging the reasons for order returns can help you identify themes or recurring problems with your products. Some of them could be really simple fixes that could save you a lot of money in the long run.

Wholesale pricing strategy

 

E.g.: if lots of people are writing ‘item not as described’, then a review of your product photography and content might be needed. If your customers are frequently mentioning issues with the sizing, you might need to add or update your sizing guide or product dimensions.

When should you consider hiring more staff or outsourcing your fulfilment?

If you’re holding back on adding more products or running a marketing campaign – in other words, holding back on taking actions that will grow your business – then it’s time for a change. You didn’t set up your store to be in the business of picking and packing orders and worrying about getting everything dispatched on time, that wasn’t your dream when you launched your business. You don’t have time to be the expert in everything, so work out what you’re going to manage yourself and what you can reasonably get help with.

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